Matrixport Report: Here’s What Happens To Bitcoin If Inflation Continues To Fall

0 7

As Bitcoin became a more mainstream asset, its correlation with the stock market rose which meant it has been impacted by world events to a higher degree than it did before. This is evident with the asset’s reaction to the rising inflation and the Fed’s continuous hiking of interest rates.

However, there seems to be a reversal in this trend as inflation is starting to ease. This means the Fed could change its stance on interest rates soon. If this happens, what does it mean for Bitcoin?

Looking Toward The CPI Data Release

In the Matrixport Daily Insights report released on Tuesday, Head of Research Markus Thielen outlines a bullish case for Bitcoin as inflation slows down. He starts out by explaining the expectation that inflation is going to fall further which would be a good thing for risk assets such as BTC.

The inflation Matrixport forecast for the year 2023 puts it below 2% before year’s end, which would be an over 50% reduction. Such low CPIs would no doubt see the Fed reverse interest rates, dropping them significantly. In fact, the report projects interest rate cuts of up to 100 bps.

“Hedge Funds remain massively hedged equities. The CFTC data for S&P500 positions is equivalent to levels only seen during the 2008 financial crisis and the European Debt crisis in 2011,” the report said. “While this does not necessarily mean that Hedge Funds are short, it indicates that hedge funds have sold those contracts and will have to cover them at some point. This buying will squeeze prices higher.”

Matrixport bitcoin report

knife

If inflation were to fall as low as predicted, then the price of BTC would rally toward the $40,000 level before the end of 2023.

As for the current Bitcoin price and how to play the market, the report further adds that “A stop loss of $27,000(-3%) could offer great risk/reward with the macro data being released soon,” pointing to the CPI data being released on Wednesday, May 10.

Bitcoin Sellers Hold Market Hostage Ahead Of CPI Release

With less than one day left to the CPI data release for May, Bitcoin sellers are currently dominating the market. As a result, the digital asset fell to the mid-$27,000 level where it currently trending. This is also understandable as investors tend to move their holdings into stables leading up to important events like this as it can trigger high volatility in the market.

This decline in price has driven BTC below its 20-day simple moving average (SMA) and puts it dangerously close to its 50-day moving average. If the digital asset were to fall below the latter, it could be disastrous as it would solidify the bears’ hold on the market, further driving down the price.

Bitcoin price chart from TradingView.com

Further downside from here could see BTC return to $26,000 where the next significant support level lies. Thus, it is important that the CPI data comes out with a lower inflation rate and the Fed moves from hawkish to dovish. Otherwise, risk assets such as BTC and the total cryptocurrency market could see a rapid decline.

Leave A Reply

Your email address will not be published.

bitcoin
Bitcoin (BTC) $ 67,773.16
ethereum
Ethereum (ETH) $ 3,504.12
tether
Tether (USDT) $ 0.999882
bnb
BNB (BNB) $ 599.23
solana
Solana (SOL) $ 182.41
staked-ether
Lido Staked Ether (STETH) $ 3,504.68
usd-coin
USDC (USDC) $ 0.999946
xrp
XRP (XRP) $ 0.598629
dogecoin
Dogecoin (DOGE) $ 0.13862
the-open-network
Toncoin (TON) $ 7.10
cardano
Cardano (ADA) $ 0.434376
avalanche-2
Avalanche (AVAX) $ 32.35
tron
TRON (TRX) $ 0.134385
shiba-inu
Shiba Inu (SHIB) $ 0.000018
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 67,746.15
chainlink
Chainlink (LINK) $ 14.73
polkadot
Polkadot (DOT) $ 6.38
bitcoin-cash
Bitcoin Cash (BCH) $ 395.54
near
NEAR Protocol (NEAR) $ 6.28
uniswap
Uniswap (UNI) $ 8.06
litecoin
Litecoin (LTC) $ 73.32
dai
Dai (DAI) $ 0.999694
pepe
Pepe (PEPE) $ 0.000013
leo-token
LEO Token (LEO) $ 5.69
wrapped-eeth
Wrapped eETH (WEETH) $ 3,659.48
matic-network
Polygon (MATIC) $ 0.545035
internet-computer
Internet Computer (ICP) $ 10.50
kaspa
Kaspa (KAS) $ 0.17918
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.47
ethereum-classic
Ethereum Classic (ETC) $ 24.07
aptos
Aptos (APT) $ 7.44
ethena-usde
Ethena USDe (USDE) $ 1.00
stellar
Stellar (XLM) $ 0.104658
monero
Monero (XMR) $ 164.32
blockstack
Stacks (STX) $ 1.97
mantle
Mantle (MNT) $ 0.87638
render-token
Render (RNDR) $ 7.14
filecoin
Filecoin (FIL) $ 4.73
injective-protocol
Injective (INJ) $ 27.78
dogwifcoin
dogwifhat (WIF) $ 2.70
hedera-hashgraph
Hedera (HBAR) $ 0.073969
arbitrum
Arbitrum (ARB) $ 0.792756
maker
Maker (MKR) $ 2,834.15
immutable-x
Immutable (IMX) $ 1.68
crypto-com-chain
Cronos (CRO) $ 0.095234
okb
OKB (OKB) $ 42.42
cosmos
Cosmos Hub (ATOM) $ 6.48
vechain
VeChain (VET) $ 0.030537
bittensor
Bittensor (TAO) $ 345.02
bonk
Bonk (BONK) $ 0.000032
arweave
Arweave (AR) $ 33.65
optimism
Optimism (OP) $ 1.96
sui
Sui (SUI) $ 0.850169
the-graph
The Graph (GRT) $ 0.218902
first-digital-usd
First Digital USD (FDUSD) $ 1.00
floki
FLOKI (FLOKI) $ 0.000205
rocket-pool-eth
Rocket Pool ETH (RETH) $ 3,914.70
renzo-restaked-eth
Renzo Restaked ETH (EZETH) $ 3,548.54
mantle-staked-ether
Mantle Staked Ether (METH) $ 3,646.34
lido-dao
Lido DAO (LDO) $ 1.92
theta-token
Theta Network (THETA) $ 1.64
thorchain
THORChain (RUNE) $ 4.86
notcoin
Notcoin (NOT) $ 0.016024
bitget-token
Bitget Token (BGB) $ 1.14
ondo-finance
Ondo (ONDO) $ 1.09
fantom
Fantom (FTM) $ 0.532808
coredaoorg
Core (CORE) $ 1.64
jasmycoin
JasmyCoin (JASMY) $ 0.03025
aave
Aave (AAVE) $ 98.27
whitebit
WhiteBIT Coin (WBT) $ 10.12
jupiter-exchange-solana
Jupiter (JUP) $ 1.07
based-brett
Brett (BRETT) $ 0.143364
celestia
Celestia (TIA) $ 6.67
pyth-network
Pyth Network (PYTH) $ 0.363809
algorand
Algorand (ALGO) $ 0.158507
sei-network
Sei (SEI) $ 0.388746
ether-fi-staked-eth
ether.fi Staked ETH (EETH) $ 3,463.59
quant-network
Quant (QNT) $ 75.74
mantra-dao
MANTRA (OM) $ 1.31
gatechain-token
Gate (GT) $ 7.83
elrond-erd-2
MultiversX (EGLD) $ 36.41
flow
Flow (FLOW) $ 0.648272
beam-2
Beam (BEAM) $ 0.019395
msol
Marinade Staked SOL (MSOL) $ 219.29
gala
GALA (GALA) $ 0.026166
kucoin-shares
KuCoin (KCS) $ 9.98
axie-infinity
Axie Infinity (AXS) $ 6.37
bitcoin-sv
Bitcoin SV (BSV) $ 47.32
popcat
Popcat (POPCAT) $ 0.935286
eos
EOS (EOS) $ 0.609689
kelp-dao-restaked-eth
Kelp DAO Restaked ETH (RSETH) $ 3,569.41
flare-networks
Flare (FLR) $ 0.020093
tokenize-xchange
Tokenize Xchange (TKX) $ 11.03
dydx-chain
dYdX (DYDX) $ 1.45
ethereum-name-service
Ethereum Name Service (ENS) $ 26.67
bittorrent
BitTorrent (BTT) $ 0.00000090264184
mog-coin
Mog Coin (MOG) $ 0.000002
ordinals
ORDI (ORDI) $ 41.04
neo
NEO (NEO) $ 12.02
akash-network
Akash Network (AKT) $ 3.50